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Inter-American Development Bank (IDB)

Key facts

  • Established in 1959
  • Ownership: Public

Latest update: 03/12/2021

Products

  • Flexible financing (ordinary capital)
  • Concessional financing
  • Guarantees
  • Grants
  • Private sector windows

Flexible Financing (Ordinary Capital)

  • Flexible Financing Facility (FFF): Through built-in options in FFF loans, borrowers have the ability to tailor financial terms at approval or during the life of a loan
    - The FFF platform—LIBOR-based financing with embedded options—enables clients to manage currency and interest rate risks
    - Borrowers can also customize FFF loan repayment terms to better manage liquidity risks
  • Local Currency Financing (LCF): Borrowers can choose to obtain financing in their own currency or in alternative regional currencies at inception or during the life of a loan
    - IDB also offers guarantees in local currency
  • Management of legacy financial products: Borrowers can transform loans under legacy financial products into flexible, market-based financing, thus enabling borrowers to manage their loan portfolio with the IDB to better suit their debt management programs

Concessional Financing

  • Blended loans: Combination of a Concessional Ordinary Capital (OC) tranche with highly concessional financing terms, and a Regular OC tranche with market-based terms from the Ordinary Capital, that are disbursed pari-passu from a predetermined mix of Concessional OC and Regular OC allocation that varies by country based on its debt sustainability
  • Concessional OC terms:
    - Source of funding: Ordinary Capital
    - Currency: USD
    - Interest rate: 0.25% fixed rate
    - Maturity: 40 years
    - Grace period: 40 years
    - Weighted average life (WAL): 40 years
    - Amortization: Bullet repayment

Guarantees

  • IDB offers guarantees to enhance financing of sovereigns with sovereign counter-guarantees
    - Types of guarantees: Partial credit guarantees or political risk guarantees
    - Uses of guarantees: Enhancement of bond issues, project finance, asset-backed securities, securities backed by future flows, or structured trade transactions
    - Amounts: Calibrated to optimize impact on the underlying instrument’s rating
    - Tenor: Maximum guarantee tenor of up to 20 years for policy-based interventions with a maximum WAL of 12.75 years; up to 25 years for investment operations with a WAL of 15.75 years
    - Fees: Pricing neutrality applies between guarantees and loans 

Grants

  • IDB provides as grants non-reimbursable funds for technical cooperation programs, though some grants may be repaid to the IDB if the program eventually obtains a loan, either from the IDB itself or another source
  • IDB Grant Facility: Grant resources dedicated specifically to Haiti
  • Trust fund grants: All legally constituted public and private organizations are eligible to receive trust fund resources, although some funds limit their support to specific geographic areas and sectors
  • Multilateral Investment Fund (MIF) grants: The MIF, an autonomous fund member of the IDB group, provides grants to support small-scale, targeted interventions that pilot new approaches and act as a catalyst for large reforms
  • Social Entrepreneurship Program: Provides grants to private, non-profit, community-based organizations and public local development institutions
    - Program resources may be used for technical assistance, training, investment in productive or basic services infrastructure, procurement of equipment and materials, working or operating capital, and/or marketing

Private Sector Windows

  • Structured and corporate finance (SCF): Provides tailor-made medium- and long-term direct loans, guarantees, and technical assistance in the form of non-reimbursable financing for large companies and eligible state-owned enterprises, financial institutions with assets above USD 500 million, and investment funds with operations and projects in one of the IDB’s member countries
    - SCF supports both project financing for greenfield and expansion projects through loans and guarantees, as well as corporate financing for expansions and modernizations
    - SCF invests in high social impact sectors such as housing and MSMEs
  • SCF finances between 25% and 40% of the total cost of a project
    - Provides up to USD 200 million in financing, and USD 400 million in exceptional cases
    - Technical assistance usually ranges between USD 100 thousand to USD 1.5 million
  • Inter-American Investment Corporation (IIC): The IIC provides loans, guarantees, equity, and quasi-equity to SMEs in any of the 26 borrowing member countries
    - Direct loans to medium-sized firms: USD 1 million to USD 20 million
    - Small business loans: USD 100,000 to USD 600,000
    - Equity investments: USD 2 million to USD 10 million, in the form of a direct stake in the company through the acquisition of shares or through the issuance of subordinated debt or loans with upside potential such as warrants or conversion rights
  • Multilateral Investment Fund
    - Long-term loans: Up to USD 1 million

    - Equity investments: Up to USD 5 million
    - Grants: Up to USD 2 million"


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